Effect of overage on land value/price

[Forever Fendt]

If it’s only 20% for 15 years then just buy it
I’ve seen 50% for 80 years before
Depends how much you want the land I guess

I have no concerns up to 40%,Where else can you get 60% discount on land with planning as the original purchase price and any appreciation is taken in to account as it is the uplift in value you pay the percentage on not the full value

 

[flossy65]

My daughter has put an offer on a house which is an old farmhouse and it comes with a large garden and a paddock.....and an overage clause on house and land. The banks will not give them a mortgage. I'd never heard of overage clause before and all I can say about it is greedy greedy people, wanting profit when selling and profit if is sold in the future. Like being trapped on a dessert island and someone will only rescue you if you pay for the boat! Surely it's about time this clause was changed abit.

 

[Wombat]

My daughter has put an offer on a house which is an old farmhouse and it comes with a large garden and a paddock.....and an overage clause on house and land. The banks will not give them a mortgage. I'd never heard of overage clause before and all I can say about it is greedy greedy people, wanting profit when selling and profit if is sold in the future. Like being trapped on a dessert island and someone will only rescue you if you pay for the boat! Surely it's about time this clause was changed abit.

It’s a free world though so it’s up to your daughter if she buys it. What exactly is it for the bank not to lend on it?

they are pretty normal if you buy land there is a development claw back, we bought some with on one and it is what it is

 

[curlietailz]

Why will the bank not lend
Surely the overage is only a % of the uplift
So if your paying the going rate for the property then overage shouldn’t affect the future value at all

overage/clawback is a % of the uplift in value above the base value if planning permission is granted.

AMC would probably lend on it

 

[snarling bee]

I've never heard of the banks refusing to lend due to a clawback. I don't understand the reasoning behind it - we are taking an increase in value after all. Offer the lender a small %age and see what they say, although on second thoughts that would be a lawyers paradise.

 

[curlietailz]

My daughter has put an offer on a house which is an old farmhouse and it comes with a large garden and a paddock.....and an overage clause on house and land. The banks will not give them a mortgage. I'd never heard of overage clause before and all I can say about it is greedy greedy people, wanting profit when selling and profit if is sold in the future. Like being trapped on a dessert island and someone will only rescue you if you pay for the boat! Surely it's about time this clause was changed abit.

Unfortunately for your daughter that is the way of the world

if the property was sold without overage I’d guess the price of potential development would be built into the price..... say double or triple the price with an overage clause

it’s not greed
It’s good business

how about your daughter bought it for £250000 had a nice life there but decided to sell and move away after 5 years.... the next buyer was a developer and got it for maybe £300000. Your daughter made £50 k profit.... lovely. But the developer got planning and suddenly the land is worth 10x what your daughter sold for and she’s lost out on £2, 700,000 !!!

shed be livid

so would the original seller for not putting an overage on

 

[holwellcourtfarm]

My daughter has put an offer on a house which is an old farmhouse and it comes with a large garden and a paddock.....and an overage clause on house and land. The banks will not give them a mortgage. I'd never heard of overage clause before and all I can say about it is greedy greedy people, wanting profit when selling and profit if is sold in the future. Like being trapped on a dessert island and someone will only rescue you if you pay for the boat! Surely it's about time this clause was changed abit.

Nobody made her bid for it. Yes, 'Overage' is seen by many as being greedy but the alternative is to up the price to reflect the potential of future development.

It's just the free market in action. For us it worked well in our favour.

I assume the purchase is sheaper than full open market value would be without an overage? If not she's being silly with her offer.

 

[chaffcutter]

We have uplift clauses on two blocks bought over my lifetime. Don’t mind really, because you get the amount you paid for it back before uplifts are calculated, and a decent share of the massive uplift in value if planning consent is granted is not to be sneezed at.
Half a loaf is better than no bread ! Not sure who is greedy, covenant holder or buyer.

I suspect that not much land around here or in close proximity to any conurbation is sold without an uplift clause nowadays.

 

[essexpete]

My daughter has put an offer on a house which is an old farmhouse and it comes with a large garden and a paddock.....and an overage clause on house and land. The banks will not give them a mortgage. I'd never heard of overage clause before and all I can say about it is greedy greedy people, wanting profit when selling and profit if is sold in the future. Like being trapped on a dessert island and someone will only rescue you if you pay for the boat! Surely it's about time this clause was changed abit.

That does seems unfair and does not make sense. If your daughter is paying market price adjusted for overage and is not asking for 100%, how could the banks lose? Have they tried multiple providers out of interest?

 

[Kidds]

My daughter has put an offer on a house which is an old farmhouse and it comes with a large garden and a paddock.....and an overage clause on house and land. The banks will not give them a mortgage. I'd never heard of overage clause before and all I can say about it is greedy greedy people, wanting profit when selling and profit if is sold in the future. Like being trapped on a dessert island and someone will only rescue you if you pay for the boat! Surely it's about time this clause was changed abit.

The way of the world and you need to accept that. Since I started this thread I have bought and sold property with overage on it and it would be foolish for sellers not to apply it in many cases.
There is nothing wrong with overage as long as it is declared right from the start. It isn't so funny to introduce it at a later stage in the deal.
Strange the thread was revived today as it was only yesterday I was informed by the seller that overage was on my house. It was nice to be able to tell them they were wrong and it wasn't at all.

 

[Highland Mule]

Cake and eat it on the part of the seller. If you want to sell, sell it. If you want to keep it do so too, but this half way house just makes money for lawyers. I do wonder though, if we get a recession and values drop, could there be a case of underage instead? Pass back half of the loss to the seller you bought it from.

 

[Exfarmer]

My daughter has put an offer on a house which is an old farmhouse and it comes with a large garden and a paddock.....and an overage clause on house and land. The banks will not give them a mortgage. I'd never heard of overage clause before and all I can say about it is greedy greedy people, wanting profit when selling and profit if is sold in the future. Like being trapped on a dessert island and someone will only rescue you if you pay for the boat! Surely it's about time this clause was changed abit.

it seems there can be many different types of overage agreements. It may be this one carries a severe penalty which may be triggered by something your daughter proposes doing. Apparently just applying for a minor planning change can trigger some.

 

[curlietailz]

And don’t forget some are triggered at first and once planning
Others are considered bite and bite again ie uplift on each and every planning

way to get round first is apply for a stable
Then apply for a housing estate

:-(

 

[Exfarmer]

And don’t forget some are triggered at first and once planning
Others are considered bite and bite again ie uplift on each and every planning

way to get round first is apply for a stable
Then apply for a housing estate

:-(

The problem is it may be n uplift across the whole value it appears every one can be different.
But at the end of the day it is up to the seller what they put on it , and up to the buyer how much of a discount they think such a clause is worth.
Of course any agent selling is going to try and minimise the possible cost, that is their job!

 

[chipchap]

I recently bought some property with a 15 year overage.
Both the seller and I agreed afterwards that we would have been better to have proceeded without the overage and to have split the extra legal costs involved between us.

Land Agents and Solicitors can be quite good at generating work for each other.